The International Forms of Vessel Sale and Purchase (“S&P”): The Modern Practice of Global Shipping and Maritime
Authors
Overview
The sale and purchase of second-hand vessels remains one of the most active segments of the global shipping market. Notwithstanding the cross-border nature of these transactions, the contractual framework adopted by market participants remains largely standardized. In practice, transactions are typically documented through a Memorandum of Agreement using established industry forms such as the BIMCO SALEFORM or Norwegian SALEFORM or any other recognised regional variants.
In this client update, ARMA Law sets out its observations on the principal contractual frameworks used in international vessel sale and purchase transactions. We highlight several commonly used ship sale forms in the global market and outline the key commercial and legal considerations that have informed their development and continued use across jurisdictions.
From an Indonesian perspective, we also examine how these international forms interact with prevailing domestic regulatory requirements. A proper appreciation of these issues will assist market participants in structuring vessel sale transactions more effectively, particularly in circumstances where Indonesian interests are involved or where the vessel is intended to be registered under the Indonesian flag.
Brief History and Development
The contractual framework used in ship sale and purchase transactions has evolved alongside the growth of the global shipping. In the early twentieth century, ship sales were usually handled through individually negotiated agreements prepared by brokers or maritime lawyers. Because each contract was drafted from scratch, the terms often varied significantly. This lack of consistency could create uncertainty, particularly on key issues such as payment terms, risk allocation before delivery, and the documents required to transfer ownership.
Following the Second World War, international trade expanded rapidly and cross border ship transactions became more common. Market participants began to see the need for a more consistent and reliable contractual structure. In response, the Norwegian Shipbrokers' Association introduced the Norwegian Saleform in 1956. This marked a turning point. The form provided a clear and structured framework covering essential elements of a transaction, including price, deposits, inspections, delivery conditions, and title transfer documentation. It quickly became the industry standard and has been updated several times to reflect changes in market practice. At the same time, the increasing use of English law and London arbitration helped reinforce consistency in ship sale transactions. Many parties preferred this legal framework because it was well developed, widely understood, and predictable in its outcomes.
As ship trading expanded into other regions such as Europe and Asia, local organizations also developed their own standard forms. Japan and Singapore, for example, introduced sale forms tailored to their legal systems and commercial practices. Despite regional variations, ship sale transactions today remain highly standardized. In most cases, parties still rely on established forms like the Norwegian Saleform or BIMCO SALEFORM as the foundation of their agreements, while adding specific clauses to address commercial or regulatory needs. These standard forms now play a central role in making global ship transactions more efficient and legally certain.
Why Standardized Sale Forms Are Widely Used
The widespread adoption of standardized forms is driven by several practical considerations:
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Efficiency in negotiations
Ship sale transactions often proceed under tight timelines. Once the principal terms are agreed in a broker's recap, parties typically adopt a recognized standard form, allowing negotiations to focus only on transaction-specific issues rather than the entire contract.
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Market practice and familiarity
Standard clauses are widely understood by shipowners, brokers, and legal advisors, reducing uncertainty and the risk of misinterpretation.
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Facilitation of financing
Financial institutions are accustomed to transactions structured under established forms such as the Norwegian Saleform, enabling the lenders for more efficient risk assessment and improving bankability.
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Established legal interpretation
Many ship sale agreements are governed by English law and refer disputes to London arbitration. Over time, a substantial body of judicial and arbitral decisions has developed, providing clarity on the interpretation of standard clauses.
Commonly Used International Sale Forms
In practice, international sale and purchase of vessels is usually documented through a Memorandum of Agreement using standard form contracts developed by maritime industry bodies or refined through market practice. These forms provide a clear structure for the key elements of the transaction, including payment terms, inspection rights, delivery procedures, risk allocation before delivery, and the documents required to transfer ownership.
Beyond their practical function, these forms also reflect the commercial culture of the markets in which they were developed. They incorporate the typical negotiation approaches, industry customs, and financing practices of shipowners, brokers, and financiers in those regions. As a result, the choice of form is often shaped not only by legal considerations, but also by the commercial background of the parties and the maritime centres involved in the transaction.
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Norwegian Saleform
The Norwegian Saleform or the so called "NSF"[1] is historically the most influential standardized contract used in second-hand vessel transactions. It was first introduced in 1956 by the Norwegian Shipbrokers' Association, reflecting Norway's long-standing position as one of the world's leading maritime nations and shipbroking centres. The NSF was designed to provide a balanced and commercially neutral contractual framework that could be accepted by both buyers and sellers in international transactions. It establishes clear provisions governing the purchase price, deposit arrangements, inspection rights, delivery obligations, and the requirement that the vessel be delivered free of encumbrances. Its practical structure and balanced risk allocation have made it the dominant contractual template used in the global second-hand vessel market.
The key features of NSF, inter alia:
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Deposit mechanism (Clause 2)
Typically requires a 10% deposit to be placed in a joint account as security for performance. The 2017 revision clarifies that the deposit is to be released promptly upon completion of delivery.
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Inspection and "as is" sale (Clauses 4 and 11)
The buyer is entitled to inspect classification records and, where agreed, the vessel itself. Upon acceptance, the vessel is sold on an "as is" basis, subject to the contractual terms.
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Drydocking and underwater inspection (Clause 6)
The buyer may request an underwater inspection. Where defects affecting class are identified, the seller must either remedy such defects or agree on price adjustment.
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Encumbrances (Clause 9)
The seller warrants that the vessel will be delivered free of all encumbrances, including mortgages, maritime liens, and charter commitments.
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BIMCO SALEFORM 2017
BIMCO (the Baltic and International Maritime Council), established in 1905, is the world's largest international shipping association. It represents a broad range of maritime stakeholders, including shipowners, operators, managers, brokers, and financial institutions across more than 120 countries. One of BIMCO's principal functions is the development and publication of standardized maritime contracts and clauses. These include charterparties, bills of lading, and ship sale agreements. BIMCO forms are widely used because they are commercially neutral, regularly updated, and tested in practice as well as in dispute resolution.
BIMCO SALEFORM has undergone multiple revisions over time, including in 1966, 1983, 1987, 1993, and 2012, before the 2017 edition was issued by BIMCO. While it retains the structure and commercial logic of earlier NSF, SALEFORM 2017 reflects BIMCO's role in modernising the document to align with current international shipping practice. The 2017 revision was driven in part by the need to address evolving regulatory risks, including the increased importance of international sanctions regimes, as well as to clarify certain procedural aspects of delivery and closing.
The key features of BIMCO SALEFORM, inter alia:
- Deposit and payment structure, typically requiring a 10 percent deposit to be placed with a stakeholder as security for performance
- Inspection and condition regime, usually on an "as is, where is" basis, with limited pre-delivery inspection rights
- Allocation of risk, with risk passing from seller to buyer upon delivery of the vessel
- Delivery framework, including notices of readiness, agreed delivery windows, and cancelling rights if delivery is delayed
- Closing mechanics, setting out the coordinated exchange of funds and documents at completion
- Documentary requirements, including bill of sale, protocol of delivery and acceptance, corporate approvals, and deletion from the seller's registry
- Sanctions clause, addressing compliance with applicable international sanctions regimes and allowing parties to avoid prohibited transactions
- Default provisions, setting out remedies in the event of non-performance by either party
- Dispute resolution framework, commonly under English law and referring disputes to London arbitration, often under LMAA Terms
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Japan Shipbrokers' Association (JSEA Form)
Japan has long been one of the leading shipbuilding nations and a key participant in global maritime trade. Within this context, the Japan Shipbrokers' Association (JSEA) developed its own standard sale forms to reflect the commercial practices and transactional norms of the Japanese shipping market. These forms are designed to accommodate the specific roles played by Japanese shipowners, shipyards, and trading houses in vessel transactions.
JSEA forms are commonly used in transactions involving Japanese shipowners, Japanese-built vessels, or where Japanese brokers and intermediaries play a central role. Their use is often driven by familiarity among Japanese market participants and the alignment of the form with domestic commercial practices. It should be noted that, in practice, reference is often made to the "Nippon Sale Form" as a specific standard form used in the Japanese market. While closely related, the term "JSEA Form" is generally used in a broader sense to describe the family of standard forms developed by the Japan Shipbrokers' Association, whereas the Nippon Sale Form refers to a particular named version within that framework. The two are therefore related but not strictly interchangeable.
In addition, transactions involving Japanese parties may, in certain cases, incorporate financing arrangements or deferred payment structures that differ from the more conventional upfront payment approach typically seen under NSF-based agreements.
While JSEA forms broadly follow the structure of a standard Memorandum of Agreement, their drafting reflects certain distinctive features of Japanese maritime commercial practice, including but not limited to the:
- Greater accommodation for structured or deferred payment arrangements, depending on the commercial context
- Transactional flexibility reflecting the involvement of Japanese trading houses and financial institutions
- Emphasis on established business relationships and long-term commercial cooperation
- Drafting and procedural approaches aligned with Japanese market expectations and negotiation practices
Substantially, JSEA-based agreements remain comparable to other standard ship sale forms in terms of core elements such as price, delivery, and transfer of title. However, their drafting style and procedural detail are shaped by Japanese transactional norms. That being said, JSEA forms are typically preferred in transactions where Japanese parties are actively involved, or where the commercial structure of the deal reflects Japanese market practice.
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Singapore Saleform [SSF2011]
Singapore has established itself as a leading maritime and arbitration centres in Asia, supported by a well-established legal system and advanced maritime infrastructure. Its position has been reinforced by key institutions such as the Maritime and Port Authority of Singapore (MPA), which oversees and promotes the maritime sector, and the Singapore Chamber of Maritime Arbitration (SCMA), which provides a specialised forum for maritime dispute resolution. Singapore's role as an international arbitration hub is supported by the Singapore International Arbitration Centre (SIAC), which is frequently selected for complex cross-border disputes. Within this institutional framework, the Singapore Saleform was developed as a market-adapted Memorandum of Agreement tailored to vessel sale transactions conducted within the Singapore maritime ecosystem.
The Singapore Saleform reflects Singapore's position as a leading maritime and financial centre, supported by institutions such as the Maritime and Port Authority of Singapore, the Singapore International Arbitration Centre, and the Singapore Chamber of Maritime Arbitration, as well as its reputation for legal certainty and efficient dispute resolution. In practice, the form is commonly adopted in transactions involving Southeast Asian counterparties or regional financiers, particularly where Singapore law is chosen as the governing law and Singapore is selected as the seat of arbitration. It is also well-suited to transactions involving more complex financing or cross-border investment structures.
The key features of Singapore Saleform are:
- Compatibility with structured financing arrangements, including bank financing, leasing structures, and security packages commonly used in Singapore-led transactions
- Alignment with Singapore legal practice, including enforceability under Singapore law and alignment with local documentation standards
- Flexibility for cross-border transactions involving multiple jurisdictions, reflecting Singapore's role as a regional deal hub
- Procedural clarity in closing mechanics, including coordinated exchange of funds and documents
- Adaptability to escrow and stakeholder arrangements commonly used in Singapore transactions
- Alignment with arbitration frameworks in Singapore, including SIAC and SCMA, offering parties a neutral and efficient dispute resolution forum
- Drafting approach influenced by common law principles, providing a degree of predictability similar to English law-based forms
- Accommodation of regulatory and compliance considerations relevant to international shipping, including sanctions and anti-money laundering awareness in financing structures
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Hellenic Shipbrokers' Forms (Greece)
Greece remains a dominant maritime nations, with Greek shipowners controlling the largest share of the global merchant fleet. Against this global recognition, the Hellenic Shipbrokers Association (HSA) introduced the H.S.A. Saleform 2024, a standardized Memorandum of Agreement for the sale and purchase of second-hand vessels.
The form was developed as a modern alternative to widely used industry templates, in particular the Norwegian Saleform (NSF 2012) and BIMCO's SHIPSALE 22. Its introduction reflects the intention of the Greek shipping community to establish a contractual framework aligned with contemporary commercial, regulatory, and operational realities.
The H.S.A. Saleform 2024 retains the core structure of a ship sale Memorandum of Agreement, while introducing several modernised features, including:
Modern compliance framework, incorporating express provisions on sanctions, anti-corruption, and anti-money laundering, reflecting current regulatory expectations in global shipping and ship finance
Environmental and recycling provisions, including references to green recycling and compliance with international standards such as the Hong Kong Convention
Chronological transaction structure, with clauses arranged in a logical sequence from deposit, inspection, and dry-docking through to delivery and completion
Balanced contractual approach, aiming to achieve a more neutral allocation of rights and obligations between buyer and seller, particularly in relation to inspection and closing certainty
Digital compatibility, with drafting designed to facilitate electronic negotiation and execution, reflecting the industry's increasing shift away from paper-based documentation
The prospect of “Indonesian Ship Saleform”
The growing involvement of Indonesian shipowners, investors, and financial institutions in vessel transactions raises the question of whether Indonesia should develop its own standardized ship sale form. Although international forms such as the NSF and BIMCO SALEFORM are widely used, a locally developed form could provide practical advantages within the Indonesian legal and regulatory system. A standardized Indonesian ship sale form could make domestic vessel transactions more efficient while remaining usable for international deals. Ship transfers in Indonesia involve specific administrative steps, including ship registration, mortgage discharge, and compliance with maritime authority requirements. A localized form could streamline these processes and reduce administrative delays.
Among others, several key features that may be incorporated into an Indonesian Ship Sale Form including the following:
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Reflect Indonesian legal principles
Designed to align with Indonesian contract law, ownership transfer rules, and asset delivery requirements.
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Follow Indonesian administrative procedures
Structured to accommodate ship registration, mortgage discharge, and compliance with requirements imposed by maritime and port authorities, including Port State Control. Furthermore, the introduction of a dedicated Indonesian form may also create opportunities for future regulatory developments or targeted incentives designed to encourage greater participation in vessel sale and purchase transactions involving Indonesian parties.
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Bilingual format
Prepared in Bahasa Indonesia and English to comply with Law No. 24 of 2009 and support international transactions.
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Address ship mortgage (hipotek kapal) structures
Includes provisions specifically suited to Indonesian mortgage creation and discharge processes. In addition, clauses addressing the legal certainty and priority position of financiers or bankers would be important to strengthen confidence in ship financing arrangements and support a more secure lending environment.
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Remain usable for international transactions
Maintains compatibility with cross-border sales and financing arrangements.
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Support for domestic maritime arbitration development
Includes standardized dispute resolution clauses supporting Indonesian arbitration practice. The adoption of a dedicated Indonesian form could also encourage the establishment of a specialized maritime arbitration institution in Indonesia, supporting the development of sector-specific dispute resolution expertise.
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Reduce legal uncertainty
To reduce legal uncertainty in vessel sale transactions involving Indonesian registry requirements, particular attention should be given to the documentary formalities governing deletion from the Indonesian Ship Registry. For instance, the deletion of a vessel from the Indonesian Ship Registry arising from a transfer of ownership to a foreign national and/or foreign legal entity must be supported by evidence of transfer of ownership executed or legalized by a Notary.[2] This requirement establishes a formal legal standard that directly affects the certainty and timing of registry-related processes.[3]
From a practical perspective, Indonesian authorities typically accord greater evidentiary weight to a Notarial Deed of Sale and Purchase than to a standalone Bill of Sale when processing vessel deletion. Accordingly, structuring the Sale and Purchase Agreement in the form of an Indonesian Notarial Deed enhances procedural certainty, reduces the risk of administrative non-acceptance, and supports the timely issuance of the Deletion Certificate required for subsequent registration under a new ship registry. In this regard, a standardized Indonesian Ship Saleform would serve to incorporate these regulatory requirements within a consistent contractual framework, thereby promoting alignment of understanding among the parties to a vessel sale and purchase transaction as to the applicable legal and administrative formalities.
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Supported by an institutional body
Developed and maintained by a recognized maritime or industry institution to ensure reliability and regulatory updates.
In light of the continued globalization of vessel sale and purchase transactions, the use of standardized contractual frameworks will remain central to promoting transactional efficiency, legal certainty, and regulatory compliance across jurisdictions. While international forms such as the Norwegian Saleform and BIMCO SALEFORM will continue to play a dominant role in cross-border transactions, the development of an Indonesian Ship Saleform presents a practical opportunity to align international commercial practice with domestic legal and administrative requirements.
By incorporating Indonesian regulatory formalities, documentary standards, and dispute resolution mechanisms into a structured and widely recognized format, such an initiative would enhance predictability in vessel transactions involving Indonesian interests and support the broader development of Indonesia's maritime prospects.
- The development of the NSF also reflects the commercial culture of the European shipbroking market, particularly the emphasis on broker-driven negotiations and the reliance on a well-established body of maritime jurisprudence. The form has been revised periodically to reflect developments in shipping practice, with notable revisions introduced in 1966, 1983, 1987, 1993, 2012, and 2017. ↩
- In this context, the term "executed" refers to the formalization of the vessel sale and purchase in the form of an Indonesian Notarial Deed, while "legalized" refers to a privately executed document signed before a Notary who verifies the authenticity of the parties' signatures. Although a Bill of Sale is commonly recognized in international practice as primary evidence of ownership transfer, Indonesian administrative practice generally requires that such evidence be supported by a Notarial Deed of Sale and Purchase of the Vessel in order to satisfy applicable regulatory requirements. ↩
- Please see article 24 paragraph (2) of the Ministry of Transportation Regulation No. 39 of 2017 on Ship Registration and Nationality. ↩